Strengthening public procurement through data analytics

Used wisely, public procurement can be a powerful economic and social lever, delivering savings, whilst contributing to government objectives around integrity, economic growth, inclusiveness & sustainability. Halting the waste in public procurement could free up at least $1 trillion a year. Public procurement can contribute to firms’ growth, and to socioeconomic and environmental objectives. With 12% of global GDP spent on public procurement, integrity, transparency and accountability in public procurement are key elements of anti-corruption strategies.

A recent World Bank report, Using Data Analytics in Public Procurement: Operational Options and a Guiding Framework, highlights how Procurement Data Analytics tools can support governments in designing effective and efficient policies to achieve this potential.

Source: authors
 

Data-driven diagnostics report. An in-depth analysis of procurement data helps identify performance gaps and determinants, identify targeted actions, systematically rationalize alternative strategies and interventions, and provide policy recommendations.  For example, a data-driven diagnostics report for Croatia revealed that, despite public procurement is demonstrably open in the country, competition levels are low and only 13% of the public procurement value is spent on contracts with SMEs. The data indicates the need for tailored, strategic approaches to increase competition for key goods, services and works. One of the greatest advantages of electronic government procurement (eGP) systems is the automatic creation of digitized procurement data for in-depth analysis and data-driven policy making.

Impact evaluations. Impact evaluations can inform governments on whether implemented policies, reforms, or programs resulted in the desired effects and, if not, how they could be restructured. Impact evaluations can also be a powerful tool to navigate the political economy of reforms, especially complicated ones. For example, an impact evaluation on the eGP adoption in Bangladesh provided credible evidence on the early gains achieved through eGP, and this evidence in turn helped to overcome initial opposition to the reform and build political consensus. Governments in early stages of designing new procurement policies can consider implementing evaluations for testing impact before full-scale implementation  and course corrections.

Interactive data monitoring tools. Interactive dashboards allow to display procurement indicators through customizable and user-friendly visualizations, and with great flexibility, such as focusing on specific contracting entities, regions, or sectors. If directly linked to the eGP system, they can also support the development of quasi real-time monitoring and ex-ante red flags for early detection of integrity risks. When programmed sustainably (eg. with minimized manual steps), interactive dashboards can require minimum maintenance and can reduce the costs of periodic data analytics exercises. In countries that are currently planning, undertaking, or refining an eGP modernization reform, an interactive data monitoring tool can be integrated to provide (quasi) real-time analytics.

Romania’s procurement monitoring dashboard delivered for the World Bank project “Assessment of the Public Procurement System and Further Support to the Implementation of the Public Procurement Strategy” (P169141).

Open procurement data. One of the key principles in the open government agenda is to increase accountability to citizens and civil society by making government data publicly available. The Procurement Anticorruption and Transparency (ProACT) platform prototype demonstrates this by collecting open data from national eGP systems from 46 countries and open data on World Bank and IDB financed contracts for over 100 countries. Further advancements could be achieved from the wider adoption of global standards for public disclosure, such as the Open Contracting Data Standards. Honduras and Paraguay are good examples of well-organized open portals that make procurement data easily accessible. These initial achievements should motivate more countries to open their data to citizens, NGOs and researchers.

Capacity building. The long-term goal is for governments to have in-house capacity and tools to effectively use their own administrative data for monitoring, evaluation, and decision-making processes.  It is important to build capacity in statistical and analytical skills and in data-driven policy making to tap into the full potential of the data and digital revolution. It can be considered in preparation of eGP adoption, as well as by countries that already adopted an eGP system.

The World Bank report “Using Data Analytics in Public Procurement: Operational Options and a Guiding Framework” provides a detailed elaboration on these opportunities, successful applications from research and World Bank projects, and ways forward for frontier work. The integration of public sector data allows to highlight patterns and construct performance or integrity indicators that would not be possible if each dataset is analyzed in isolation, therefore strengthening the precision and depth of the analysis outputs and policy recommendations. As sustainable public procurement practices become more mainstream, there is also an increasing interest in measuring the social and environmental outcomes of public procurement, to achieve emission reduction goals and leverage green economy. The report provides additional resources and guidance for teams and governments interested in applying Procurement Data Analytics tools.